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Offshore senses uptick in market but uncertainties remain

An overall positive macroeconomic outlook and increased regional infrastructure spending have suggested an improving business environment for the ailing offshore industry, though a rosy outlook is far from certain, according to Singapore-based OSV shipyard ASL Marine.

There are already uncertainties to oil prices, one of the key market determinants for the offshore sector, as oil majors have decided to extend curbs on supply, coupled with geopolitical events in Iran, Venezuela and other parts of the world. This will in turn impact upon the level of upstream activities, ASL Marine observed.

“If oil and gas majors increase their capital expenditures across the value chain as forecasted, it could benefit the recovery of the oil services sector,” ASL Marine said.

Read more: Offshore contractors prepare for upturn

It added that there are also mid-term opportunities for the group’s non-offshore and marine business with higher infrastructure spending in select Asian region, triggered by the Belt and Road initiative.

“In Singapore, as the Tuas Mega Port project gains momentum, the demand for hiring tugs and barges is expected to remain strong,” ASL Marine said. The first berth of the Tuas Mega Port project is scheduled to come on stream in 2021.

In general the factors discussed above pointed to a largely positive market, ASL Marine noted. “However, given that capital goods lag the industry cycle and is very sensitive to marco economy, the group is benefiting from these factors only gradually,” it commented.

“In shipbuilding, we will continue to seek orders for non-OSV vessels such as tankers, tugs and barges and exercise caution with selection of customers’ portfolio based on creditworthiness and size of projects,” Singapore-listed ASL Marine said.

Nam Cheong, another Singapore-listed, Malaysia-based offshore shipyard, is expecting a stable outlook for AHTS and PSV in fulfilling exploration and production commitment. However comparatively lower activities can be expected for higher capacity AHTS in view of the current cost optimisation environment.

Read more: Nam Cheong looks forward to better times ahead after completing restructuring

“As for accommodation and maintenance vessels, steady outlook can be expected as brownfield hook-up and commissioning will persist due to increasing number of projects and ageing facilities,” Nam Cheong said.

The Malaysian group is continuing to monitor and review its shipbuilding schedule, together with deferment and cancellation plans for its remaining vessels which have yet to be delivered.

ASL Marine, on the other hand, will explore more revenue sources by venturing beyond its traditional markets of Southeast Asia, Australia and Europe, to North Asia, Indian subcontinent and the Middle East.

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